I had a long chat with JH Greene construction manager, Kevin White, who had some insightful thoughts on how projects can avoid the recurring annoyance of change orders and unanticipated costs not encompassed in a proposal. Sure, PMs have the best intentions of avoiding any deviation from the plan, but let’s face it – life happens when we least expect it. When a corporate construction decision maker evaluates several general contractor proposals, it’s tempting to go with the lowest bid without any review, however this has a way of biting in the long run. While some variations are unavoidable, other times you can avoid the unnecessary change orders with some of the following suggestions Kevin shared with me.
Communicate All Details
Many times, change orders are the product of missing details. When communications are consistent and easily understandable, problems can be taken care of early on. Kevin emphasized that the more people you have engaged in the details, the more brain power you have to spot issues and remedy them early in the process.
Processes on Processes
Having some structure in execution can make a huge difference in team success. Integrating a formal procedure that is updated and improved consistently as needed can streamline projects to maximize bottom line through reduced time and no budgetary overages.
All-Encompassing Activity Costs
Kevin explained to me that there often are cut-and-dry material and labor costs, however there are supporting actions that need to be accounted for in budgetary considerations. For example, items such as testing, inspections, and various start-up activities are covered by the wise. Although no company has psychic estimating abilities (from my knowledge), all successful firms know one of the secrets to a successful project is having a reliable, detailed foundation.
Equipment Cost Comprehensiveness
Efficiencies with utilizing one piece of equipment for multiple tasks should be approached with caution, as timing can be impacted without simultaneous activity from multiple machines. Often, equipment with over or under-sized volume can lead to higher costs and waste as well. With materials, the case is very similar—although timing is a bit more important. Material rates go up and down with price curves and delivery requirements adding complexity to the equation. Practice makes perfect to understand historical trends and forecast the wisest time to buy.